Morning Gold & Silver Market Report – 10/12/2011

Peter LaTona

10/12/2011 10:22:00 AM

Gold Goes Up on Renewed European Debt Crisis Concerns – Gold prices went up to a two-week high in New York overnight, as Slovakia remains the only country in the 17-nation euro area who voted against the plan for a rescue fund. Global equity markets went down on the news and then right back up on the announcement that there will be a second vote on this matter. There is an expectation that Slovakia will vote yes the next time around. In the end, global markets have been up sharply because Germany and France announced that they have a plan to develop a plan to fix the crisis, and because Slovakia is expected to change their vote the next time around.

Former Federal Reserve Chairman, Alan Greenspan, addressed this issue last Friday, but his thought bears repeating as this euro zone crisis continues to drive the markets. Mr. Greenspan said that the U.S. stock market and economy will face severe consequences from a European financial crisis. He also stated that he cannot see how this crisis will resolve itself without major debt restructuring. “There is no credible scenario for which I am aware in which they can get by without significant haircuts in their sovereign debt,” Greenspan said. “The issue is one where, are they broke? Yeah, I think they’re broke. Are they going to resolve the issue? In and of themselves, I can’t see how.”

JP Morgan has predicted that gold prices will go to $2500 oz by year’s end. They are sticking to the $2500 per oz target, but it may take a little longer. For the year’s end, it might be more like $2000 - $2200 per oz. One key indicator that was pointed out is gold’s 1:1 correlation to entitlement spending.

At 8AM (CT) the APMEX precious metals prices were:

• Gold price - $1,685.90 – up $22.90
• Silver price - $32.72 – up 69 cents
• Platinum price - $1,547.10 – up $28.30
• Palladium price - $613.60 – up $7.30